The Money Mustache Community
Learning, Sharing, and Teaching => Taxes => Topic started by: HoneyChaseZippy on June 18, 2018, 02:23:51 PM
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Unexpectedly, I switched jobs recently. I was unable to max out my 401k for the year. Currently at 8k contributed so I have about 10.5k left on the table in terms of tax deferred. My new job won't offer a 401k until 1yr of service.
Advice as how to lower my tax obligation-would maxing a tIRA the way to go to capture the additional 5.5k?
My wife is employed with a retirement plan, can I piggyback on a tIRA for her and add an additional 5.5k to her name? Note, she will max out her 401k at 18.5 for the year and our combine AGI will be at roughly at 80k.
Not sure of any restrictions to expect with her having a retirement plan at work.
Any advice would be greatly appreciated.
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How does your income compare to the IRA deduction limits? https://www.irs.gov/retirement-plans/plan-participant-employee/2018-ira-contribution-and-deduction-limits-effect-of-modified-agi-on-deductible-contributions-if-you-are-covered-by-a-retirement-plan-at-work
Since you contributed to a workplace retirement plan this year you're considered to have one even though you no longer have one.
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My Modified AGI is expected to be at 50k with both jobs so if I'm reading that chart correctly, I'm safe to take the full deduction if I'm under 101k.
Is this correct?
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My Modified AGI is expected to be at 50k with both jobs so if I'm reading that chart correctly, I'm safe to take the full deduction if I'm under 101k.
Is this correct?
If you're including your wife's income, then yes. Those limits are based on your AGI (line 37, form 1040) plus some deductions (like the IRA deduction, student loan interest deduction, among others) that need to be added back in, so it's based on joint income for married filers. Here's info on how to calculate MAGI from AGI https://www.irs.gov/publications/p590a#en_US_2017_publink1000230489
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Terran,
Thank you so much. That link was very insightful.